Risk and Severity
What is severity?
We have been spending considerable time on risk in preparation for our up coming Piedmont Triad PMI Risk Management event. Our last specific risk blog we discussed risk and probability. That is only a part of the equation. We are interested in probability, but we also need to know the severity. Severity is the impact of the event coming to realization. How much money is at risk due to the event. Not all risks are equal in this regard. If the severity or impact is inconsequential, we will not spend much time on our actions to mitigate. As good stewards of our organization, we will want to apply our efforts to protect from the downside of our actions. We will still need to go through some measure of diligence to assess the impact upon our project rather than assume an event will have no impact on our project.
How do we determine the severity?
We can learn some things to help us in the severity prediction. We can scrutinize our historical record to ascertain the sort of risks we have experienced in the past. Our project white books are a good place for some of this information. If our organization keeps a risk register for each, we can likewise learn from that documentation.
Sometimes we make risk assessment more difficult than it needs to be. Certainly, there is a time for positive attitude. However, the uncovering and assessing potential implications of a risk coming to the fore, is decidedly not the time for blind optimism. The project team can often provide a reasonable prediction of the risk severity. You just have to listen to the “negative news”, keeping in mind that is what you need to hear. Teams and specific expertise in your organization can help you postulate risks and predict the consequences associated with those risks. That is the goal – theorize what can happen for each identified risk.
Specifically, we will want to associate a magnitude of impact with the trauma event. For example, we can have three categories as follows:
- low impact
- medium impact
- severe impact
We can also use a scale or range of numeric values to demonstrate our assessment of severity. For example, we can use from 1 to 100, with 100 being the most severe. This ranking will allow us to prioritize our plan of attack and focus our precious resources on the most critical, and from the last blog, most probable events.
What will do with this?
At the PMI Risk Management event, we will demonstrate how to connect all of these “dots” to produce a comprehensive approach to risk management. The event is going to be highly interactive. We will demonstrate techniques and processes then you will have the opportunity to try the technique yourself.